US Economic Growth Revised Upward to 3.1% in Third Quarter
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The US economy grew at a faster pace in the third quarter than previously estimated, fueled by stronger consumer spending and exports, reports Bloomberg.
Gross domestic product (GDP) increased at an annualized rate of 3.1% in the July-to-September period, according to the Bureau of Economic Analysis' third estimate released Thursday. This is a revision upward from the prior projection of 2.8%.
The upward revision was driven by an increase in consumer spending, which grew at a 3.7% annualized rate, marking the fastest pace since early 2023. Exports also grew faster than initially estimated, with both categories benefiting from a surge in services.
These figures reinforce the notion that the US economy remains resilient despite widespread predictions of an impending slowdown, notes Bloomberg. This report follows closely on the heels of the Federal Reserve's decision to signal a slower pace of interest-rate cuts in 2025, a move partly based on recent robust economic data.
The report also revealed an upward revision to the personal consumption expenditures price index (PCE), excluding food and energy, to 2.2%. This metric, closely watched by the Fed, is a key indicator of underlying inflation. The November PCE data is due out on Friday.
"This week’s data show the economy is set to end 2024 on a solid note, which is fortunate since we’ll have to contend with heightened policy uncertainty and possibly greater challenges in 2025," said Oren Klachkin, an economist at Nationwide, to Bloomberg. "We think the Fed maintains an easing bias, but the bar for rate cuts just got higher."
Further revisions revealed upward adjustments to other GDP components, including business and residential investment and government spending.
In a separate report, applications for US unemployment benefits fell last week, following a spike earlier in the month. This volatility is often observed during the holiday season. Despite the recent fluctuation, overall unemployment benefits remain subdued, hovering near pre-pandemic averages.
Another report released Thursday showed existing-home sales in the US exceeding a rate of 4 million in November for the first time in six months. This surge in homebuyer activity came as individuals reluctantly accepted mortgage rates above 6%.